Common-Size Income Statement
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- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
- Aggregate Accruals
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Ecolab Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Sales Composition
- The proportion of product and equipment sales relative to net sales has exhibited a gradual decline, decreasing from approximately 82.69% in 2018 to 79.74% by the end of 2021. Conversely, service and lease sales have shown a proportional increase, rising from 17.31% to 20.26% over the same period. This shift indicates a strategic move toward augmenting service and lease revenue streams within the company's sales portfolio.
- Cost of Sales
- The cost structure reveals mixed trends. Product and equipment cost of sales as a percentage of net sales decreased from 48.26% in 2018 to a low of 46.49% in 2020, but then increased to 47.91% in 2021. Meanwhile, service and lease cost of sales rose more consistently from 10.55% in 2018 to 11.90% in 2021, indicating relatively higher cost pressures or investment in the service segment. Overall, total cost of sales including special charges has increased steadily from 53.51% in 2017 to 59.81% in 2021, reflecting a rising expense base relative to revenues.
- Gross Profit
- Gross profit margins have declined from 46.49% in 2017 to 40.19% in 2021, signifying decreased profitability at the gross margin level. The downward trend aligns with the increase in total cost of sales, which has outpaced revenue growth, potentially reflecting higher input costs or pricing pressures.
- Operating Expenses
- Selling, general and administrative expenses (SG&A) as a percentage of net sales improved overall, decreasing from 31.92% in 2017 to 26.83% in 2021. This reduction suggests enhanced operational efficiency or cost control. However, special charges including restructuring, acquisition/integration, disposal/impairment, COVID-19 related activities, and other gains/losses have contributed variably to expenses. Notably, restructuring costs peaked around 2019 at 0.78% before declining significantly by 2021. COVID-19 related costs appeared in 2020 and 2021, negatively impacting expenses by up to 0.33% of net sales in 2021.
- Special Gains and Charges
- Special gains and charges have fluctuated, with net negative effects generally observed from 2018 through 2021. The largest negative impact occurred in 2020 with a charge of 1.52% of net sales, decreasing to 0.81% in 2021, indicating some recovery or reduction in one-time expenses.
- Operating Income
- Operating income margins showed a decline from 14.6% in 2017 to 11.84% in 2020, before recovering modestly to 12.55% in 2021. Despite the pressure on gross profit, the company managed to contain operating expenses sufficiently to stabilize operating income.
- Interest and Other Income
- Net interest expense as a percentage of net sales decreased from 1.84% in 2017 to 1.28% in 2019, but increased again to 2.46% in 2020 before improving to 1.71% in 2021. Other income contributions have been positive but smaller, showing a slight decline from 0.54% in 2018 to 0.27% in 2021, which likely indicates limited impact on overall profitability from ancillary income sources.
- Income Before Taxes and Provision for Taxes
- Income before income taxes decreased from 12.75% in 2017 to a low of 9.85% in 2020, recovering to 11.11% in 2021. Provision for income taxes relative to net sales has been somewhat volatile, ranging from 1.5% to 2.48% across the years, with no clear trend, suggesting effective tax rate management amid fluctuating earnings.
- Net Income
- Net income from continuing operations was recorded at 8.35% of net sales in 2020 and increased to 8.98% in 2021, showing positive profitability trends post-2019. However, net income figures including noncontrolling interest reveal a sharp loss of 10.07% in 2020, attributable largely to substantial losses from discontinued operations recorded at -18.43% that year. This anomaly significantly distorts the continuity of net earnings for that period. Excluding discontinued operations, net income attributable to the company experienced a similar pattern—peaking around 10.9% in 2017, dipping into negative territory in 2020, and recovering to 8.87% in 2021.
- Summary
- The overall financial pattern reflects a company undergoing strategic shifts in sales mix toward services, facing rising cost pressures consistent with declines in gross margin. Management has improved operational efficiencies, as suggested by reduced SG&A ratios, but special charges and one-time events, including restructuring and pandemic-related impacts, have affected profit measures. The presence of significant discontinued operations losses in 2020 caused a notable dip in net profitability for that year, whereas 2021 data indicates recovery and stabilization across key earnings metrics.